Under this new legislation, "hedge funds seeking to avoid the requirements of the Investment Company Act would be exempt only if they file basic disclosure forms and co-operate with requests for information from the SEC." Source: Hedgeweek.com

The bill would also require hedge funds to establish "anti-money laundering programmes" and report "suspicious transactions".

The regulation of the hedge fund industry has been on the way for a while now. Treasury Secretary Timothy Geithner and new SEC chairman Mary Schaprio have both indicated that regulation of the industry is necessary.

The financial crisis has created a profound shift in general opinion towards the industry. Many feel as though the unregulated industry was a contributing factor to the meltdown that we are still working through today (it's hard to argue with these people).

The feeling is that any financial company that has the ability to inflict harm on the system (through a collapse, etc) needs to be regulated.

The public has little appetite for the hedge fund industry right now, so I would imagine that there will not be too much resistance to this proposed legislation.

The days of the hedge fund industry operating outside of the "watchful" eye of regulators are coming to an end.